Unconscionable rent increases? Not in Newark — thanks to new ordinance

Frank Giantomasi not only is a member of a firm that bears his name, Chiesa Shahinian & Giantomasi, and the top real estate lawyer in Newark — he is a Newark native, who knows how the city operates.

That’s why, on Wednesday, in a Newark Redevelopment Update conference attended by more than 400 top real estate professionals, he told them they had better temper their expectations for rent increases on their properties in the city.

“This is a city that is 70% tenants — a constituency that elects the government,” he said. “And, if you think you’re going to attack tenants, and you get reelected, you just don’t understand politics.

“I think the mayor’s first charge is to deal with the people that live here, sleep here every night.”

His comments came a day after the Newark municipal council approved the Unconscionable Rent Increase Ordinance, an ordinance imposing fines of up to $1,200 for each apartment not under rent control where tenants are required to pay an unconscionable rent increase of more than 5% in a single year.

Newark officials said the new law became necessary because Newark residents not protected by rent control are suffering from the national trend of rents rising faster than income growth.

In 2022, according to Zillow, Newark’s average rent increased by 11.2%, from $1,802.50 a month to $2,004.78.

The city’s Office of Tenant Legal Services, which provides free legal services for low-income tenants facing eviction, report that low-income tenants have faced rent increases of as much as $945 in the East Ward, $816 in the South, $750 in the Central, $550 in the North and $445 in the West.

That’s why Newark Mayor Ras Baraka said it’s necessary to hold the line at 5%.

In defining increases of more than 5% as unconscionable, the ordinance builds upon a state anti-eviction law making it illegal for a landlord to impose a rent increase so large that it is “unconscionable.”

“Newark faces a crisis of affordability,” Baraka said. “The value of property in Newark is increasing rapidly. Landlords are charging rents of over $2,000 for one-bedroom apartments in areas where they were just $750 five years ago. Thirty percent of the rental housing in Newark is not under rent control, and there is presently no penalty for how much a landlord can increase those rents.”

Staci Berger, CEO of the Housing and Community Development Network of New Jersey, was thrilled by the move.

“We commend the city of Newark for leading the way towards housing affordability and security for renters with this innovative and important law,” she said. “Placing clear parameters on the term ‘unconscionable’ holds landlords accountable and prevents those who are profiteering from using renters as ATMs. New Jersey rental costs are spiraling out of control, but Newark is stepping in before it becomes an economic and humanitarian crisis.

“It’s crucial for our state’s economy to have powerful, statewide rental protections that keep renters in their homes and provide stability for both renters and property owners. We urge the New Jersey Legislature to follow the city of Newark’s lead and act swiftly to stop greedy and reprehensible rent increases.”

Baraka said the ordinance is just one step the city is taking.

“The Unconscionable Rent Increase Ordinance is one important step that we have taken toward keeping Newark affordable,” he said. “It’s not the only one, but it’s a big step toward continuing to be the kind of culturally and economically diverse city that makes Newark so special.”

The Unconscionable Rent Increase Ordinance supplements another ordinance, the Newark Rental Registration Ordinance, that passed in April, requiring landlords to register all rental units with the city’s Department of Economic and Housing Development.

With a substantial number of Newark units presently not subject to registration by the city, that ordinance requires every currently rented unit in Newark to be registered within 120 days of its adoption and will facilitate enforcement of the Unconscionable Rent Increase Ordinance.